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iSAP Methodology

OTC: Credit Management
June2015

Workshop Ground Rules
 Cell phones off
 Full attention throughout
 Scheduled breaks only

In collaboration with

Client Logo Here

The information contained in this document is proprietary. Copyright © 2013 Capgemini. All rights reserved.

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Introduction
1. Name
2. Background and Role in the Organization, Project
3. Understanding or Experience with SAP Business Process
4. Expectations

We will capture expectations on a flip chart
and mark progress through the session
In collaboration with

Client Logo Here

The information contained in this document is proprietary. Copyright © 2013 Capgemini. All rights reserved.

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Agenda
Scope and Objectives
Business Process Concepts and Best Practices
Business Process SIPOC Exercise
Solution Manager Setup
Security Authorizations Design
Gaps and Requirements for Reports, Interfaces, and Enhancements
Implementation Considerations

In collaboration with

Client Logo Here

The information contained in this document is proprietary. Copyright © 2013 Capgemini. All rights reserved.

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Introduction to Credit Management
A large number of outstanding
receivables or bad debts can have a
considerable impact on company’s
performance. Credit Management can
minimize your credit risk by defining a
credit limit for your customers. This is
especially important if you do
business with customers in financially
unstable sectors or countries, or trade
with countries that are politically
unstable or that adopt a restrictive
exchange rate policy.

In collaboration with

Client Logo Here

The information contained in this document is proprietary. Copyright © 2013 Capgemini. All rights reserved.

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All rights reserved. 6 . Copyright © 2013 Capgemini.Objectives of Credit Management Reduce payment failure  by early detection of high risk customers  by taking action of the appropriate measures Have a good assessment of the risk profile of your customer base  to advise sales where to focus on  to support SOX and Basel II regulations Do not impede daily business  Monitor everything. but take action only when necessary  Emphasis on pro-active measures In collaboration with Client Logo Here The information contained in this document is proprietary.

Based on rules the application can calculate credit limit proposals. • Supports the integration of external credit information providers by standard XML interfaces.  Support of automated updates of credit scoring information. In collaboration with Client Logo Here The information contained in this document is proprietary.cash integration and support of automated credit decisions and customer data maintenance. All rights reserved. Real-time integration with external information provides like D&B ensures accurate customer scoring as well as request for credit insurance. 7 .  Credit limit checks to various time points during the sales and distribution process (sales order entry as well as delivery). Consolidation of credit exposure for the respective business partner enables central credit monitoring • Companies with high number of business partners can automate their credit management processes by implementing rules for scoring and rating of their business partners.  Increased process efficiency by order-to. Copyright © 2013 Capgemini.Benefits of Credit Management • Supports collection and processing information about the credit exposure of a business partner from different SAP and non-SAP systems.

All rights reserved. Copyright © 2013 Capgemini. 8 .Credit Management Process Configuration In collaboration with Assigning credit limit Client Logo Here Credit Check Analysis The information contained in this document is proprietary.

Credit Control Area Credit control area is an organizational element which takes care of all the credit management activities within the company code. All rights reserved. In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini. 9 .

finance)  Real time integration with external information providers  Comprehensive analytics & reporting In collaboration with Client Logo Here The information contained in this document is proprietary. 10 . order tacking.SAP Credit Management in a nutshell  Flexible scoring  Powerful process automation  Easy integration with operational systems (sales. Copyright © 2013 Capgemini. All rights reserved.

4. Credit Limit is the maximum amount that a firm is willing to risk in an account.Credit Limits Order Credit limits are threshold that a company (creditor) will allow its customers to f Receivables owe at any oneCollection time without having to go back and review their credit file. Copyright © 2013 Capgemini. 11 . It speeds up the sales process 3. It is an account monitoring tool In collaboration with Client Logo Here The information contained in this document is proprietary. All rights reserved. It reduces risk and improves collection activity and efforts. Credit Limits helps the creditor in the following ways: 1. It frees up valuable time for other credit management tasks 2.

Copyright © 2013 Capgemini.Check Rules In collaboration with Client Logo Here The information contained in this document is proprietary. All rights reserved. 12 .

13 .Credit Segments Credit Segments are organizational units used by the Credit Management. Copyright © 2013 Capgemini. All rights reserved. Credit segments have the advantage that it is possible to group economic activities of the company from the perspective of credit control. In collaboration with Client Logo Here The information contained in this document is proprietary.e. Credit segments allow to split customers into different risk classes and support risk assessment i. Every Credit Segment has its own credit limit and commitment. to meet Sarbanes-Oxley guidelines.

Credit Groups Credit group controls which transaction has to be blocked if customer credit limit exceeds. All rights reserved. 14 . Copyright © 2013 Capgemini. In collaboration with Client Logo Here The information contained in this document is proprietary.

Flowchart Credit Management Sales & Distribution Create Order Payment & Clearing Deliver Order Sales Post Invoice A/R Account. Calculate Credit Limit Credit Manager Ext. Copyright © 2013 Capgemini. Info Provider (e. 15 .g. All rights reserved. D&B) Assign CL Search Customer Look up Credit Report In collaboration with Client Logo Here Post Payment Update Customer Credit Exposure & Payment Behavior The information contained in this document is proprietary.

Credit Policy in SAP Credit Management SAP User concept SAP Authorization concept Flexible organizational structure in SAP Credit Management Workflows for credit limit applications. All rights reserved. credit limit recalculation In collaboration with Client Logo Here The information contained in this document is proprietary. credit worthiness check failed. external rating changed. scoring recalculation. risk class assignment and credit limits recalculation Scheduled mass updates for external rating import. Copyright © 2013 Capgemini. credit exposure above 100% Event driven updates for scoring recalculation. 16 . credit limit change. score change.

Copyright © 2013 Capgemini. All rights reserved.Credit Score Cards The customer credit score card shall determine the probability of the credit failure risk of a customer It should consist of decisive and stable indicators Access to internal data (from sales.…) is used for scoring Real-time XML based access to external data from information providers Flexible definition of scoring formulas in SAP Credit Management Business partner specific assignment of scoring formulas In collaboration with Client Logo Here The information contained in this document is proprietary. 17 . accounts receivable.

All rights reserved.4.OTC 2. Copyright © 2013 Capgemini. 18 .1 – Credit Management Process Process Step Description In collaboration with Client Logo Here The information contained in this document is proprietary.

Potential Process Improvement Opportunities (from Value Stream session) Ref. 19 .Credit Management . Process Step Legacy Pain Points (in terms of waste) Improvement Opportunities (eliminate waste) KPI’s 1 Create Billing document • All are currently manually created (processing) • Currently. waiting. MRP run is weekly. and defects • Daily MRP and PO processing to reduce waiting time • Use of contracts/PIR to proactively process PO with accurate Pricing and lead time info • PO processing time • Days supply in Raw Material Inventory • Improved Planning • Reduced Inventory 2 Change Billing document • See above 3 Process Billing Due List • POs get stuck for approvals for very low $$ values • Multiple levels of approvals • Long processing times due to paper based approvals • Redefine PO approval limits • Approval should be only for non-MRP materials • Improved MRP planning due to faster processing • Eliminate paper based PO approvals Reduction in PO needing approvals Faster processing through SAP approval 4 Monitor or view list of Billing documents • Manual PO message output • Dispatching POs through mail • Waste of Buyers’ time • • • • Reduced labor time Automated PO message output EDI/Email use resulting in GREEN efforts 5 Monitor the output of messages • Buyers review POs repeatedly • Manual Update of POs • Calling/emailing vendors for updates/acknowledgements • Waste of Buyers’ time • EDI use for PO acknowledgement • ASN for faster receiving In collaboration with Client Logo Here EDI use Web based PO output Fax Email Improved buyer efficiency The information contained in this document is proprietary. All rights reserved. POs are processed weekly (waiting) • Manual processing has high rate of errors (defects) • Automated processing to reduce processing. Copyright © 2013 Capgemini.

Copyright © 2013 Capgemini. and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary. Interfaces. 20 . All rights reserved.Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports.

All rights reserved. because  Blocking a customer order always disrupts the business process  Approval decisions for blocked orders might have to be made under time pressure  Relationship to customer might be strained  Identify customers which utilize their credit limit to a certain extent and take action  Intensify cash collection  Verify payment terms  Check with sales and a risk assessment to find out if a higher credit limit is appropriate In collaboration with Client Logo Here The information contained in this document is proprietary.Proactive Credit Management A proactive & preventive approach in Credit Management is necessary. 21 . Copyright © 2013 Capgemini.

22 . Copyright © 2013 Capgemini. A firm’s receivables can be termed as its most liquid assets and this serves as prime collateral for a secured loan.Pledging This refers to the use of a firm’s receivable to secure a short term loan. All rights reserved. In collaboration with Client Logo Here The information contained in this document is proprietary.

Credit-specific master data for customers can be evaluated according to the following questions.Credit Profile In the analysis of the credit profile. All rights reserved. 23 . for example: How many and which customers belong to a particularly bad/good risk class? How are the customers distributed over the spectrum of the score/risk class? Which customers are locked by SAP Credit Management ? Which customers are assigned to a specific analyst/customer group? Which customers should be subject to special attention? Which rule was used to determine the score? In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini.

All rights reserved. The firm’s policy and practice of collection. Paying practices and habits of the customers. In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini. 24 .Credit Policy Determining the Level of Credit Sales Determining of the Credit Standards Determining of the Credit Terms Rate of cash discount Factors Determining Credit Policy: The effect of credit on the volume of sales •Credit terms •Cash discount Policies and practices of the firm for selecting credit customers.

Establish regular credit line reviews throughout entire customer lifecycle Allow immediate approval for customers with good previous history Automate credit analysis and initial credit line approval using rule-based decision support capability which is regularly updated Multiple tiers of credit approval supported Monitor total customer credit exposure including subsidiary activity.Best practices Credit policy is clearly defined. monitored and communicated. child accounts. All rights reserved. Copyright © 2013 Capgemini.Credit Management. and activity across product lines In collaboration with Client Logo Here The information contained in this document is proprietary. 25 .

26 . In collaboration with Client Logo Here The information contained in this document is proprietary. concentrating on the credit limit. concentrating on the risk class. The focus is on the distribution of the credit limit over the credit segments. for example. All rights reserved.  Risk Class/Score Monthly History (0CDM_DS02_Q0002) This query portrays changes to the risk class and score in SAP Credit Management for each month.  Profile Analysis: General (0CDM_C0_Q0002) The query evaluates the credit profile of business partners according to the central characteristics of SAP Credit Management.FSCM Credit Management Standard Reports Credit Profile  Risk Class (0CDM_DS03_Q0001) The query evaluates the credit profile of business partners. The focus is on creating an overall list with all of the important information.  Risk Class/Score Daily History (0CDM_DS01_Q0002) This query portrays the changes to the risk class and score in SAP Credit Management for each day  Credit Limit Daily History (0CDM_DS01_Q0001) This query portrays the changes to the credit limit at credit segment level in SAP Credit Management for times and days. The focus is on the distribution of risk classes over the business partner. Copyright © 2013 Capgemini.  Credit Limit Monthly History (0CDM_DS02_Q0001) This query portrays the changes to the credit limit at credit segment level in SAP Credit Management for each month.  Profile Analysis: Credit Limit (0CDM_C0_Q0001) The query evaluates the credit profile of business partners. by country.

 Score from Analysis Process (0CDM_I0_Q0001) The query represents the score calculated by the analysis process and its influencing factors for each business partner. Copyright © 2013 Capgemini.FSCM Credit Management Standard Reports Credit Risk  Early Warning List (0CDM_MC0_Q0001) The individual business partners are listed with their credit exposures. You can branch to the liability individual evaluation via the report-report interface. aggregated by risk class. the credit exposure. All rights reserved.  FIAR: Payment Behavior Payment History (0FIAR_O10_Q1001) The query represents the payment behavior of the customers. You can use this query to identify the business partners with a particularly high exposure. 27 .  Portfolio (0CDM_MC0_Q0003) The query portrays the credit exposure.  Credit Exposure by Country (0CDM_MC0_Q0002) The query portrays the credit exposure of the business partners.  Liability – Individual Evaluation (0CDM_C2_Q0001) The query represents the composition of the liability of business partners broken down by different liability categories. and the credit limit utilization. aggregated by country In collaboration with Client Logo Here The information contained in this document is proprietary.  Credit Risk Analysis Credit Exposure List (0CDM_MC0_Q0004) The query represents the credit limit.

In collaboration with Client Logo Here The information contained in this document is proprietary. 28 . The focus is on changes to the risk classes resulting from the simulation or new rating.FSCM Credit Management Standard Reports New Rating Analysis and Simulation Analysis Overview of Collective Processing Runs (0CDM_EXTR_Q0001) This query provides an overview of all collective processing run extracts for the new rating or simulation of credit profiles of business partners in SAP Credit Management that are in the SAP Business Information Warehouse (BW). The query is used as a selection list for branching to the queries of the new rating analysis/simulation analysis. New Rating Analysis and Simulation Analysis: Risk Class (0CDM_C1_Q0001) The query analyzes collective processing runs for simulation or new ratings as part of the determination of credit profiles of business partners in SAP Credit Management. All rights reserved. New Rating Analysis and Simulation Analysis (0CDM_DS00_Q0001) The query analyzes collective processing runs for simulation or new ratings as part of the determination of credit profiles of business partners in SAP Credit Management. Copyright © 2013 Capgemini. It provides an overall view of the changes to the credit profiles that result from such collective processing runs.

Copyright © 2013 Capgemini. Interfaces. 29 . and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary. All rights reserved.Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports.

Copyright © 2013 Capgemini. 30 . All rights reserved.Standard Billing Process Flow (SAP) In collaboration with Client Logo Here The information contained in this document is proprietary.

31 . Automatically 5 Invoice Splits Use Standard 6 Billing Blocks Use standard as reference 7 Special Pricing 8 Account Determination Use standard as reference 9 Reference Number and Assignment Number Use standard as reference 10 Invoice List Use standard as reference In collaboration with Client Logo Here Key Decision Made The information contained in this document is proprietary. All rights reserved.Key Design Decisions – Billing Processing Ref. Key Decision Description Initial Recommendation 1 Doc Types Use Standard 2 Number Ranges (internal. external) Use internal range 3 Text types by billing document types Default from customer master/sales order/delivery 4 Billing due list creation Manually. Copyright © 2013 Capgemini.

All rights reserved. 32 . 10 Incompletion Log Use standard as reference Header / Item 11 Output Types Use standard key combination 12 In collaboration with Client Logo Here The information contained in this document is proprietary.Key Design Decisions – Billing Processing Ref. Copyright © 2013 Capgemini. Key Decision Description Initial Recommendation Key Decision Made 9 Partner Functions Use standard as reference from sales order.

All rights reserved.Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports. Interfaces. and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini. 33 .

Solution Manager Setup for Billing Processing 1. All rights reserved. De-centralized) 3. Align the Roles tab with the Process Flow Diagram and each processing object/process step 4. divide each process step as necessary to meet separation of duties and governance approach (e. Copyright © 2013 Capgemini.. assign all list and display transactions to this process step. 34 . Post Functional Design Document and Process Flow Diagram to the General tab at the high level processing node level In collaboration with Client Logo Here The information contained in this document is proprietary. Populate the high level processing node with all processing objects in scope 2. Adjust each object/process step scope of transactions to fit the process flow diagram. Create one “Sales Order Processing Display” Process step. Assign the process step to a new role “OTC Processing Display” 5. Centralized vs.g.

All rights reserved.Solution Manager – Process Hierarchy for Billing Process In scope Process Steps are inserted below the correct Business Process node (selected in the Structure tab from the Business Object Repository) In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini. 35 .

All rights reserved. “Change” allows all order administrators to change any Sales Order) In collaboration with Client Logo Here The information contained in this document is proprietary. 36 . must be reviewed and split into more granular process steps as necessary (e. Copyright © 2013 Capgemini.g.Solution Manager – Transactions for Billing Process Default transactions assigned per each object..

All rights reserved. Copyright © 2013 Capgemini.Solution Manager – Posting Documentation Functional Design Document Process Flow Diagram Functional Design Document and Process Flow diagram are posted on the General Documentation tab at the Business Process node level In collaboration with Client Logo Here The information contained in this document is proprietary. 37 .

Interfaces. and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini.Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports. All rights reserved. 38 .

Restriction Process Restriction (exceptions only. Copyright © 2013 Capgemini.Security Authorization Requirements Ref. All rights reserved. In collaboration with Client Logo Here The information contained in this document is proprietary. 39 . Process Step (Sol Man) 1 Create Billing document 2 Change Billing document 3 Cancel Billing Document 4 Process Billing Due List 5 Monitor or view list of Billing documents Monitor the output of messages 6 Role (Sol Man) Org. not recommended) Notes 7 8 This must be completed for each Process step listed in Solution Manager for this process.

All rights reserved. 40 .Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports. Copyright © 2013 Capgemini. Interfaces. and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary.

All rights reserved. 41 . Copyright © 2013 Capgemini.Functionality or Standards Gaps Ref. Gap Description In collaboration with Gap Resolution or Mitigation Client Logo Here The information contained in this document is proprietary.

Process Step In collaboration with Report Description Client Logo Here The information contained in this document is proprietary. 42 . Copyright © 2013 Capgemini. All rights reserved.Reports Ref.

Copyright © 2013 Capgemini.Interface Ref. All rights reserved. 43 . Process Step In collaboration with Interface Description Client Logo Here The information contained in this document is proprietary.

Process Step / Document or Order In collaboration with Conversion Description Client Logo Here The information contained in this document is proprietary. 44 . Copyright © 2013 Capgemini.Conversion Ref. All rights reserved.

All rights reserved. Process Step / Document or Order Form Description 1. Copyright © 2013 Capgemini. In collaboration with Client Logo Here The information contained in this document is proprietary.Forms Ref. 45 . Billing Output Form to suit the needs of the organization.

Process Step In collaboration with Enhancement Description Client Logo Here The information contained in this document is proprietary.Enhancement Ref. Copyright © 2013 Capgemini. 46 . All rights reserved.

All rights reserved. Copyright © 2013 Capgemini.Agenda Scope and Objectives Business Process Concepts and Best Practices Business Process SIPOC Exercise Solution Manager Setup Security Authorizations Design Gaps and Requirements for Reports. Interfaces. and Enhancements Implementation Considerations In collaboration with Client Logo Here The information contained in this document is proprietary. 47 .

All rights reserved.Creating the top-level KPIs involves focus on the ‘Vital Few’ measures…this must logically link to Operational KPIs Supplier Lead Time GR Processing Time Days in Inventory PO Processing Time Example: Return On Net Assets Executive Executive KPIs KPIs  Reflect High Level Results  Not actionable Example: Reducing Days in Inventory improves RONA Supporting Supporting KPIs KPIs  Reflect Operational Results  Links Executive KPIs to Operations  Can be impacted by external forces  Not actionable in isolation Example: Reducing Procurement Cycle times improves Days in Inventory Operational Operational KPIs KPIs  Drives Operational Results  Logical. controllable. Copyright © 2013 Capgemini. training. master data settings. KPIs. ItIt must must be be based based on on internally internally controllable. 48 . KPIs. process and policy changes  Objectively measurable in the System Any Any actionable actionable business business case case must must be be based based on on more more than than Executive Executive or or Supporting Supporting KPIs. and mathematical impact to the Supporting KPIs  Actionable by SAP process design. In collaboration with Client Logo Here The information contained in this document is proprietary. actionable actionable Operational Operational KPIs.

Copyright © 2013 Capgemini.Use the Insights APQC Benchmarks Initial KPIs and performance gaps should be detected during the Value Stream Mapping session. The focus should now be on which KPIs to prioritize for this process and what system and process/policy changes are required to enable. 49 . All rights reserved. In collaboration with Client Logo Here The information contained in this document is proprietary.

50 . Copyright © 2013 Capgemini. 1 2 3 Executive Level KPI Return on Investment Reduction in Inventory Levels Profitability Middle Level Supporting KPI Days in Inventory Days in Inventory Total Supply Chain Cost In collaboration with Operational KPI Procurement Cycle Time PO Cycle Time Expected Improvement in Operational KPI • XX days Changes required to achieve • XX % #FTE’s per Billion in • X FTE’s Revenue Client Logo Here The information contained in this document is proprietary. All rights reserved.Process KPIs Ref.

51 . Copyright © 2013 Capgemini. All rights reserved. SOX Considerations Client Logo Here The information contained in this document is proprietary. 1 2 3 4 5 6 Process Step Create Billing document Change Billing document Cancel Billing Document Process Billing Due List Monitor or view list of Billing documents Monitor the output of messages In collaboration with Regulatory. Policy. and SOX Considerations Ref.Regulatory. Policy.

All rights reserved. 1 2 3 4 5 6 Process Step Create Billing document Change Billing document Cancel Billing Document Process Billing Due List Monitor or view list of Billing documents Monitor the output of messages In collaboration with Organizational Change Impact Description Client Logo Here The information contained in this document is proprietary. Copyright © 2013 Capgemini. 52 .Organizational Change Impacts and Considerations Ref.

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Appendix Completing the Functional Design Document .

1 Business Process SIPOC Document the results of the SIPOC exercise 2. In collaboration with Client Logo Here The information contained in this document is proprietary. All rights reserved.1 Process Scope List and describe the Process steps in logical order.2 Business Process Diagram Insert the completed Visio process flow diagram. document project objectives and improvement opportunities provided aligned with the Process steps. etc. 2. 55 .3 Detailed Process Step Description Narrate each process step including SAP and non-SAP steps.2 Business Objectives and Expected Benefits Using the 7 wastes as a framework for improvement. 2.Completing the Functional Design Document Section Title/Description Instructions 1. and using the Process steps in scope. from the Solution Manager hierarchy for this process. 1. Copyright © 2013 Capgemini. triggers.

Completing the Functional Design Document (continued) Section Title/Description Instructions 3. 3. 3.2 Major Policy. Regulatory. 4. In collaboration with Client Logo Here The information contained in this document is proprietary.) 4.9 User Roles and Authorizations By Process Step and Role. (e. Copyright © 2013 Capgemini. Structures design on current roles and organization. 3. All rights reserved. 56 . Sox Considerations Document how the Business Process design impact or how is it impacted by Policy or Regulatory considerations? 4.4-8 Technical Considerations Describe impacts of the Business Process Design in terms of Reports.3 Organization Change Describe the impact of the Org.1 Solution Key Design Decisions Document the required Configuration for the Process.3 Gap resolution Document work-around or process changes to resolve or mitigate the gaps. or Enhancements. 5 Conclusion Narrate an executive summary of the designed process 3-5 sentences. document required restrictions..1 KPI’s Document the KPI’s required to maintain and support the new processes. Interfaces. 3. etc. cycle time.g. Conversions. Do not postpone Design decisions to the Realization Build phase. 6 Sign-off Sign-off by Capgemini lead and Business Process Owner 7 Contributors and Participants List all with role and name.2 Gaps Document any functionality gaps related to Process.